Web Bookings Click With Businesses
Kris Sarajian admits it. He was a guerrilla Web booker.
The marketing executive regularly bypassed his company’s travel agency to book his business travel arrangements online.
The logic was obvious. “It would save money,” Sarajian said. His employer, Akibia Inc., an information technology provider in Westborough, Mass., now books virtually all its travel online.
Sarajian was far from alone. Guerrilla booking has become typical in offices coast to coast, said Bjorn Hanson, a travel industry consultant with PricewaterhouseCoopers.
Sure, it might violate a company’s formal policy, but “it’s pretty hard to punish people who find ways to save money,” Hanson said.
Web-based specials, smaller booking fees and the ability to find cheaper travel options all contribute to savings available online that can range up to 60% and typically average about 8%, according to PricewaterhouseCoopers. Even offline, there are greater savings for business travelers. The odious Saturday stay-over rule has eased a bit, and unused nonrefundable tickets sometimes can be applied to future travel.
The gap between what business and leisure travelers pay has narrowed, contributing to a dramatic shift in the business travel marketplace. Business travelers have figured out how to better tap the lower rates typically offered leisure customers. Although business travelers are still a key source of travel industry revenues and profits -- and often still pay higher rates -- gone are the days when airlines, hotels, car rental firms and others could expect corporate customers to open up their wallets without asking for deals similar to what leisure customers get.
The trend has spurred Internet travel sites such as Travelocity, Expedia and Orbitz -- whose rapid growth has stemmed largely from leisure travelers -- to offer services specifically catering to business travelers.
Some experts warn, however, that booking online doesn’t always produce savings. And such practices often don’t allow companies to capitalize on volume discounts obtained from specific travel suppliers.
Nonetheless, more companies are formally encouraging Internet bookings -- legitimizing previously covert practices of Web guerrillas.
Computer giant Hewlett-Packard Co. now books nearly 70% of its U.S. and Canadian tickets online and is beginning a pilot program to do the same in Europe, said Lea McLeod, HP global travel manager.
HP saves about 15% when it buys online versus using a traditional agency. Moreover, administrative costs of processing tickets booked online are 30% to 50% less than those booked manually.
A National Business Travel Monitor survey of 1,200 business travelers found that 65% now use the Internet to plan some aspect of their trip -- everything from checking a flight schedule to booking a rental car, reports Peter Yesawich of Yesawich, Pepperdine, Brown & Russell, a travel industry consulting firm. That’s up from 55% a year ago.
He said much of that growth came from the failure, until just recently, of travel suppliers to understand that business travelers were developing the same price sensitivity as leisure travelers.
“Business travelers now are much more likely to adjust their flight schedule to save money, and they aren’t as interested in paying more just to be on a concierge floor at a hotel,” Yesawich said.
It’s all part of a “commoditization of the industry,” said Carl Winston, a travel business expert at San Diego State.
For the most part, road warriors no longer differentiate between airlines or even hotel chains, instead making their decisions on ratios of price and convenience, Winston said.
Internet tools help reinforce this message by quickly giving corporate travel planners and employees information that could only be seen by travel agents just a few years ago.
Bob Werner, a business consultant in Hamden, Conn., who flies about 20,000 miles annually, uses the Internet to learn which airline flies where and compares costs of tickets and hotel options.
“This kind of information is bound to help save the traveler money because you can quickly compare options,” Werner said. “This allows you to choose to spend less, or more, depending on what you have to give up or get.”
Confronted with online booking, Akibia, the Massachusetts IT service provider, signed up in March to a Web-based Expedia Corporate Travel system, where going online was the first option rather than the covert one.
Since then, the company has driven the average cost of an airplane ticket down $100, said Donna Jakobites, the executive assistant who oversees the company’s travel arrangements.
Just months after adopting the system, 99% of Akibia’s travel is now booked through Expedia.
Among other Internet travel sites, Orbitz also has an offering and Travelocity just launched Travelocity Business, a service targeting small to mid-size companies with annual travel budgets of $500,000 to $15 million.
The Travelocity service charges $5 to process an airline ticket booked online and does not place a fee for car and hotel arrangements. Phone reservations cost more -- up to $20 for an air-and-hotel package. That compares with between $10 and $60 in fees charged by traditional travel agencies.
Three factors have fueled business travel’s shift to the Internet, said Ellen L. Keszler, president of Travelocity Business. The advent of special discounted Web fares aimed at leisure travelers in the late 1990s was the start.
“Business travelers began to get upset about the differential between those fares and what they were paying,” Keszler said.
At the same time, airlines began to reduce -- and then, by March of last year, eliminate -- commissions paid to travel agents. Agencies turned around and started charging clients for bookings, increasing the price difference between tickets bought online and those bought through agents. Finally, a slow economy made companies much more conscious of travel expenditures.
Traditional travel agents argue that the increasingly complex nature of travel makes their services more valuable.
That’s why most corporate travel is still purchased as part of a managed program, said Carol Devine, chief executive of the National Business Travel Assn., a trade group for corporate travel managers and frequent business travelers.
Although the slow economy and travel slump have spawned myriad deals and specials for business travelers, they can be hard to find. And when viewed through a wider corporate lens, they might not save the business money, travel agents say.
“Companies don’t want their employees to become travel agents and spend a lot of time arranging travel,” said Jay M. Ellenby, chief executive of Safe Harbors Travel Group, a corporate travel agency in Baltimore.
Moreover, employees must understand fare rules, or they might get stuck with a ticket that doesn’t meet their needs, Ellenby said.
Until last month, for example, American Airlines had a “use it or lose it” policy on nonrefundable tickets. The policy was specifically targeted at business travelers who were taking advantage of the low-cost fares.
But now, customers who cancel reservations before departure have a year to apply the ticket value to a new trip. Continental and other airlines quickly adopted similar policies.
Similarly, convention goers are learning that the group rate isn’t always the best.
The Promotional Products Assn. International negotiated an $89-a-night rate at the Luxor hotel for its trade show in Las Vegas earlier this year. But some members cut their own deals, “and in some cases paid no more than $50 for rooms down the street,” said Steve Slagle, president of the trade group.
In some instances, guerrilla Web bookings can actually cost companies more -- even when an employee finds a less expensive fare. That’s because companies seek to cut costs by negotiating discounted rates with airlines, either systemwide or for specific routes. These discounts can amount to between 5% and 25%, said Ellenby, but often require a predetermined volume of business.
One-fourth of National Business Travel Assn. members surveyed last year reported that fares bought online impaired their companies’ ability to meet volume thresholds and contractual commitments.
That’s why companies using Expedia and Travelocity can now program the services to show special negotiated fares.
Internet travel bookings by businesses are only expected to grow, experts say, especially as wireless technology allows travelers to make changes efficiently even while on the road.
Competition with traditional travel agencies will get only stiffer, especially because no one is predicting a rebound in business travel anytime soon.
“At Hewlett-Packard, travel has been so tightly controlled and reduced that we have learned to conduct business effectively without the ‘face to face’ meeting,” McLeod said. “I suspect many other companies have also experienced the same phenomenon. This will have a significant impact on our overall travel demand.... Even if demand does start to bounce back on a sustained basis, it’s difficult to imagine consumption going back to the levels of the late ‘90s.”
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Saving savvy
Watching your business travel expenses? Experts and road warriors offer these 10 cost-saving tips:
1. If you are going to a convention or trade show, look at online booking sites and call the host hotel directly for its best rate. Don’t assume the convention rate is the lowest.
2. If you are traveling later, sign up for a Web-based fare watcher program that will alert you to airfare sales to your destination. Orbitz, for example, offers a program called Deal Detector; Travelocity’s is Fare Watcher.
3. Look for hidden hotel charges. Inquire at the front desk about fees for the fitness room and per-minute surcharges on local and 800 telephone numbers.
4. Take your cell phone. Use those extra or unlimited minutes, especially if you are traveling within your local calling region or have a nationwide service contract.
5. Walk instead of taking a cab. This works great if you are staying in a city center where everything is close by. It also will help you work off those restaurant and expense account meals.
6. Check if your company has negotiated discounted rates with airlines, hotels and car rental agencies.
7. If you are renting a car, get directions to the gas station nearest the rental agency. This will make you more likely to use it when you return, so you avoid paying rental agencies’ high gasoline prices.
8. Know the cancellation policies on your airline tickets, hotel and car rentals. Many of the lowest rates are nonrefundable or require change fees. But policies often are revised. Many airlines will let you apply the cost of an unused ticket to the purchase of a new ticket within a year, as long as you canceled your reservation before departure.
9. Use the concierge. In an unfamiliar city, the concierge will be your best ally for everything from directions for local transportation to guidance on smart restaurant choices.
10. Don’t buy anything at the airport that you can get ahead of time. Whether buying gasoline or snacks or magazines and books, you’ll find it cheaper elsewhere.
-- Jerry Hirsch
Los Angeles Times
